More on Chevron-Ecuador BIT arbitration

Via Opinio Juris, a quick update on my post below: Chevron have just been awarded damages of circa $700 million by an arbitral panel set up under the US-Ecuador BIT, on the basis that court delatys in rulings on commercial matters constituted a violation of the BIT by not providing an effective means of asserting claims and enforcing rights.

While this case appears to have largely concerned an issue of judicial, rather than administrative due process, it is not irrelevant from a GAL perspective - not least because Ecuador has rejected the finding of the arbitral panel; a course of action that is not, in international legal terms at least, really open to it. Chevron's own site (so perhaps not the least biased source around) notes that

Ecuador is defending the second largest arbitration docket in the world with more than 11 claims seeking more than US$6.5 billion in damages. Ecuador has withdrawn from the World Bank's arbitration program, making it the second country ever to do so, and has indicated its intention to cancel scores of bilateral investment treaties that provide for international arbitration of investment disputes.

It will be interesting to see whether this does indeed come to pass; and, if so, whether Ecuador will remain an outlier, or whether other developing countries may be tempted to challenge the network of bilateral treaties that have been developed to govern international investment.

BITS, Fair and Equitable Treatment and the Cross-Pollination of GAL

I wanted to flag an interesting post by Roger Alford over on Opinio Juris, in which he notes that a New York court has given Chevron leave to bring an arbitration claim against Ecuador under the US-Ecuador Bilateral Investment Treaty, despite the fact that Chevron is currently fighting a 17 year old lawsuit in Ecuador over rain forest contamination (an issue that it acquired when it bought Texaco in 2001). Of key interest here is the fact that Chevron wants to go to arbitration over, inter alia, a claim that it has been denied due process in the Ecuadorean courts. More generally, they are seeking a finding that

...Ecuador has breached the 1194, 1995, 1996 and 1998 investment agreements and the Ecuador-United States BIT, including its obligations to afford fair and equitable treatment, full protection and security, an effective means of enforcing rights, non-arbitrary treatment, non-discriminatory treatment, national and most favoured nation treatment, and to observe obligations that it entered into under the investment agreements.

Of course, it is not certain that an arbitration proceeding would have any impact on the cae in Ecuador; or, indeed, that the panel would find that it had jurisdiction to hear the case. However, Alford notes that "In the hearing this week, counsel for plaintiffs in the underlying Ecuadorian litigation described the arbitration as 'a collateral attack' on a future Ecuadorian judgment"; and there would seem to be some risk of this, given that Chevron are also seeking a finding that

...Claimants have no liability or responsibility for environmental impact, including but not limited to any alleged liability for impact to human health, the ecosystem, indigenous cultures, the infrastructure, or liability for any unlawful profits, or for performing any further environmental remediation arising out of the former Consortium.

Of most interest to me here, however, is Alford's analysis of why Chevron is pursuing this course of action; which, if correct, provides an interesting insight into the way in which recourse to GAL mechanisms in one context can - at least, it is hoped - lead directly to improvements in administrative law protections at other levels of governance, and can also impact upon domestic implementation of awards from other jurisdictions:

My sense is that Chevron is bringing this action not only in an attempt to succeed on the merits of its due process claim, but also to send a signal to the Ecuadorian court that any future action that denies Chevron basic due process will be subject to international scrutiny. The Ecuadorian court now faces the unpleasant prospect of knowing that the Ecuadorian government may be on the hook financially for any improper judgment rendered against Chevron.

I also think it is quite plausible that the BIT arbitration is an opening salvo in future attempts by Chevron to challenge the enforcement of the Ecuadorian judgment in foreign courts. If a BIT arbitration panel concludes that Chevron has been denied due process, this would significantly bolster arguments that the foreign judgment should not be enforced in the United States under the Hilton v. Guyot standard.

Some thought on E-GAL, Edinburgh 2009

Next things next, a brief account and a few reflections on the E-GAL event in Edinburgh on Tuesday the 17th of June. It was, as I suspected it would be, a huge pleasure to be involved in this event, not least of all because it was the first time since I returned to Edinburgh University in an official(ish) capacity since graduating almost ten years ago. More importantly, I think I am correct in saying that this is the first global administrative law event in whose organization neither NYU nor the IRPA in Rome played any role whatsoever. GAL has, of course, had to date some fairly serious institutional backing from some fairly serious institutions, and there can be no doubt that this has played a major role in its increasing prominence; however, if it is really to establish itself as a genuine field of research and study, the ideas and framework it proposes must stand or fall on their own, entirely independently of its initial institutional backers. Events such as these are a crucial next step in testing whether this is in fact possible.

And if this event is anything to go by, it is indeed possible. The organizers (Kasez Lowe, Pierre Harcourt and Danielle Rached) did a first class job of selecting the abstracts for presentation, and of inviting a good mix of those with some experience of the GAL field on one hand and those largely new to it on the other. Amongst the presentations, for example, were (excellent) contributions by Matthias Goldmann and Tiago Fidalgo de Freitas, both of whom have been involved in the GAL project for longer than I have; and, amongst professorial contributors, having the continued, challenging input of Neil Walker (who, incidentally, has a provocative new paper on postnational constitutionalism up on SSRN) was, as always, a real plus; unfortunately, Professor Janet MacLean from Dundee – another who was contributing to the GAL literature prior to my own involvement – had to pull out at the last minute due to illness. Hope she got well soon.

Many of the contributors, however, had no prior knowledge of the GAL project, and were weighing its usefulness as a frame of analysis within their own fields. It is here that GAL – if it is to flourish – must provide real traction. The various contributions provided, in my view at least, real grounds for optimism in this regard. It was also of real interest to have the input of Professor Alan Miller, Chair of the Scottish Commission for Human Rights; he sounded both interested in and cautious about the potential for GAL to drive progressive developments in his own field.

The abstracts of all of the papers are available here; for ease of reference, here is a list of the titles of presentations given:

Unpacking the "Concept" of "Global Administrative Law": Some Reflections on Form, Substance and Pedigree by Nuhaila Carmouche, European University Institute.

The Challenge of Global Governance to the Concept of International Law: Refurbishing Legal Positivism by Matthias Goldmann, Max Planck Institute.

The Added Value of Global Administrative Law by Tiago Fidalgo de Freitas, European University Institute.

The Dilemma of the People and Pluralist Approach in the Global Perspective by Younsik Kim, University of Edinburgh.

GAL, Investment Law and Equality by Jarrod Hepburn, Oxford University.

The Protection of Cultural Heritage: Between the European Legal Order and the Global One by Carmen Vitale, University of Bologna.

Good Governance and Electric Sector Reform in Nigeria: A Critique from a Human Rights Perspective by Oche Onazi, University of Edinburgh.

Weak Judicial Review: Lessons for Global Administrative Law? by Aruna Sathanapally, Oxford University.

If I was to make one minor critical comment about the event, it was that these abstracts, and not fully fledged papers, were all that was circulated in advance; I always find it difficult, under these circumstances, to engage fully and in detail with the arguments being made – particularly when they are as advanced and as complex as they were here – and that the actual “conferring” suffers as a result. In the event, the quality of the papers and the presentations went some considerable distance to offsetting this problem; however, there is to my mind ultimately no substitute for the possibility to read the substance of the arguments to be made in detail in advance.

A quick recap of what seemed to me some of the major points, in conclusion. Professor Alan Boyle (who I think could fairly be described as a traditional-European-international-lawyer-and-GAL-sceptic) raised the issue of what he called GAL’s “lack of focus”, and suggested that this was one of the major obstacles to it achieving more widespread adherence. By this, I think he intended the fact – to which I alluded in my previous post on Viterbo – that GAL can sometimes appear (indeed, be presented) as all things to all people; as a simple catch-all under which all global governance can be subsumed, and which consequently lacks in analytical clarity and bite. There is something of a fine line that must be tread in this regard; one one hand, I can but agree: those writing in the field of GAL must have a clear idea of what the “added value” of this framework is, and not allow it simply to become a placeholder for “global governance” (Tiago’s paper did examine precisely this issue of added value, but did so with reference to the global constitutionalist and international public authority projects; it did not discuss the other side / the added value of GAL as opposed to simply “governance”). On the other hand, there has been a real effort within the GAL project – and rightly so in my view – not to be too proprietorial about the definitions of the field, in order that it might be informed by as many different perspectives as there are national administrative laws. This balance has not yet been ideally struck.

Another theme that emerged from discussions, related to the above, was the difference between the “US” and the “European” conceptions of global administrative law (as an aside, an interesting point about the sociology of GAL: the project seems to be mostly popular with international lawyers in the US, and with administrative lawyers in Europe, where most international lawyers remain skeptical. This can be seen even in the two major institutional backers of the GAL project: the Institute for International Law and Justice at NYU and the Institute for Research on Public Administration in Rome). A useful distinction was introduced in a working paper by David Dyzenhaus to encapsulate this: administrative law can, he argued, be either “constitutive” (i.e. the actual rules establishing administrative bodies, delineating powers within them, etc.), “procedural” (i.e. the rules by which these bodies operate) or “substantive” (i.e. the norms, regulations and decisions that they actually produce). The US vision of GAL is limited fairly strictly to the second, procedural form (mirroring largely the limitations on the discipline of administrative law within the US academy); the European version, on the other hand, explicitly includes at least the first two elements, and often also the third (in Sabino Cassese’s work, for example, there is often a degree of slippage between the terms “global administrative law” and simply “global law” – indeed, I on occasion have the impression that for him these two terms are largely interchangeable). The extent to which these need to be reconciled before GAL can become a discrete “field” of study is, of course, an open question.

A third theme, and one that I addressed in my own paper, and was picked up by Tiago and Neil Walker, was that of the relationship between GAL and “global” constitutionalism. Neil insisted – I think probably correctly – that a legitimate GAL can ultimately not afford to ignore the issue of the “constitutive moment” of the bodies that it seeks to regulate; and – again, probably correctly – that there is no need to think of GAL and constitutionalism as in competition (I would agree entirely on this point, despite the manner in which I sometimes present the issues: I would, however, insist that GAL and global constitutionalism are different and not necessarily complementary projects, and that the image of community ultimately implied in the latter need not inform the former). A general level of agreement was, I think, reached on the idea that while any future global constitutionalism would need a global administrative law, the inverse did not hold; and that there was no need to view GAL as in any way opposed to the deployment of constitutional discourse in particular postnational regimes.

Other key themes touched upon in the presentations and in the discussion was that of the concept of “law” that informs GAL (Nuhaile Carmouche did a good job of critically mapping the various contenders, while Matthias made a strong argument in favour of using a “refurbished” notion of legal positivism); the various ways in which GAL might – and might not – contribute to the increasing legitimacy of global regulatory governance; and of the need for GAL to actually result in tangible improvements in concrete cases if practitioners are going to take it at all seriously (Alan Miller’s contribution was particularly illuminating on this point).

Unfortunately, memory dictates that I will have to stop at that point, which even I find entirely unsatisfactory given the amount of rich discussion that this brief recollection has omitted – particularly in terms of the more concrete papers (relating to investment arbitration, cultural heritage, etc; Jared Hepburn, for example, made an intriguing argument as to the interaction between the global and domestic levels in the interpretation of “fair and equitable treatment” in investment disputes). In any event, congratulations to the organisers on putting together a first-rate symposium; and I very much hope to get a chance to read the assorted presentations in more detail in the not-too-distant future. Again, if anyone present wants to add to or correct this account, please do leave a comment below!

Transparency and investment arbitration

Ineresting article in The Economist here, on the growing demand for transparency with respect to international investment arbitration. It notes that Canada and the US are pushing strongly for more openness with regard to these proceedings, but that many - in Europe in particular - are very reluctant to follow suit:

However, sticklers for secrecy may not be able to blind the public with legal science for much longer. Luke Eric Peterson, editor of the Investment Arbitration Reporter, a trade publication, expects a “pitched battle” to break out soon between backers and opponents of transparency. In part this will reflect pressure on governments from citizens and NGOs who want to know more. For example, some Germans, at least, want details of the €1 billion ($1.3 billion) arbitration claim that Vattenfall, a Swedish power firm, has brought against their government under the Energy Charter Treaty.

Hat tip to Peter Spiro over at Opinio Juris, who also makes an interesting point about the institutional competitiveness of investment arbitration:

The fact that international arbitration is institutionally competitive adds an element here not present where tribunals have a decisionmaking monopoly (as in the WTO). I’m not sure which way that cuts, though. Over the long run, arbitration platforms that are open and allow broad participation will enjoy greater legitimacy; in the short, corporate and state arbitral litigants might just prefer to keep things quiet.

GAL and the nature of Bilateral Investment Treaty (BIT) tribunals

One of the recurring pleasures of being based at NYU is the opportunity to attend and participate in the huge number of interesting seminars, colloquia and workshops hosted by the law faculty. here Yesterday, in the context of the colloquium on Interpretation and Judgment in International Law run by Benedict Kingsbury and Joseph Weiler, Professor José Alvarez, President of the American Society of International Law and Professor at Columbia University, gave a first airing to some of his recent work on BIT tribunals (co-authored with Kathryn Khamsi, and soon to be published as an IILJ Working Paper - I'll flag it here when it comes out), and in particular with a number of recent decisions that have stemmed from claims made by US companies against the Argentinian Government in the wake of the Argentine economic crisis of 2001. Here is the abstract:

This article re-examines interpretative questions raised in the course of five controversial arbitral decisions issued against Argentina arising from claims brought by US foreign investors who had been operating public utilities in that country. All these claims arose in the wake of Argentina’s crisis in 2001, stem from measures taken by that state under an Emergency Law issued in 2002, and arose from the application of the US-Argentina Bilateral Investment Treaty. In all the cases, Argentina attempted to assert a defense of “necessity,” based on its own national law as well as a clause in the treaty that provides that state parties are not precluded from taking “measures necessary for the maintenance of public order” or to protect its “essential security interests.” Three of the decisions yielded multimillion dollar judgments against Argentina, another partly accepted Argentina’s defense of necessity, and the fifth decision, by an ICSID Annulment Committee, severely criticized but did not annul one of the previous arbitral verdicts. The article focuses on the interpretative questions raised by the defense of necessity and uses them to shed light on the nature or “soul” of this regime.

The paper contains some extremely detailed and insightful critique of the decisions in each of the five cases examined; as such, it is well worth reading for anyone with an interest in the particular field. As ever here, however, my more immediate concern is with framing the paper, and the issues to which it gives rise, in terms of a global administrative law perspective more generally. The point that I want to highlight in particular is not dealt with explicitly in the paper, but rather emerged from the interesting - and at times spirited - debate that followed its presentation in yesterday's seminar.

BIT tribunals occupy something of an unusual place in the conceptual topology of global administrative law - a fact attested to by the number of articles focusing on the topic (see, for example, the general article on the subject by Van Harten and Loughlin; Schill's analysis of the "fair and equitable treatment" standard; and Montt's article on BITs in Latin America). First and foremost, they are review bodies, established in order to ensure that the national administrative agencies abide by the administrative law rules imposed upon them under the terms of the BIT in question when dealing with the assets for foreign investors. As such, they fit reasonably nicely into the initial classification - a supranational ex post review body in the general category of distributed administration. Here, the "global" element of the GAL rules refer to their provenance in an international treaty (albeit a bilateral one).

So far, so clear; however, there have been suggestions that the Tribunals themselves can and should be viewed as itself constituting a type of administration - a loose network that, through the increasing production of a relatively homogenous body of jurisprudence on the interpretation of certain key administrative law terms ("fair and equitable treatment", "necessity", etc.) that appear in almost all BITs (and here, the widespread use of model treaties has contributed to the fact that the terms of the some 3000 BITs are themselves strikingly homogenous), is itself effectively functioning as a global "standard setter" in terms of the global administrative law of foreign investments. This becomes even more important when we consider that a number of BITs now refer to these standards as forming part of general customary international law.

The paper by Alvarez and Khamsi does much to cast doubt on this prospect, noting as it does the differences between the arbitral decisions, and the reasoning behind them, in the five cases dealing with similar sets of circumstances arising under the same treaty - to the extent that, in one decision, no reference whatsoever was made to a slightly earlier case in which the notion of "interpretation" was interpreted in an opposing manner, despite the fact that one of the arbitrators had acted on both panels. This would seem to do much to undermine the "relatively coherent jurisprudence" claim that underpins the suggestion that BIT tribunals should themselves be viewed as a loose form of network administration. Interestingly, this position - that arbitrators are chosen on a case-by-case basis, and have no obligation to follow or even to acknowledge any sense of precedent (indeed, to do anything other than represent the interests of those who appointed them) - was maintained strongly in the ensuing debate yesterday by those working mainly in the field of international commercial arbitration.

Alvarez, however, made the important and interesting point that the second tribunal's lack of citation and attempt to distinguish the previous interpretation of the notion of necessity made in the earlier decision under the same treaty had been met with strong criticism by many of those working within the field of BIT arbitration (itself a relatively small community of arbitrators). This raises the thorny issue of whether BIT tribunals should be understood as being like (purely private) commercial arbitrations, or whether they have a particular nature that implies a degree of "publicness", and which would, in turn, render proper the application of some notion of precedent, and perhaps further administrative law/due process/accountability mechanisms. What the paper and subsequent discussion did illustrate, and illustrate well, is the often almost constitutive importance - insisted on for some years now by authors such as David Kennedy and Martti Koskenniemi - of the self-understanding of practitioners in the development of the field in which they operate. Whether BIT arbitrators are predominantly chosen in future from the worlds of international law or commercial arbitration could have a huge impact on the very nature of the tribunals themselves, and by extension any possible characterisation as constituting a system of "networked administrative governance".

The conclusion of the discussion? Perhaps predictably, the jury - for want of a better term - is still out...